Havana Cuba Business Travel Culture and Politics

Havana Cuba News

Cuba Business News

Posted December 10, 2007 by publisher in Cuba-World Trade

Email this article | Print this article | Search Havana Journal        

Here is the program description from the CUBA session on Wednesday afternoon, December 5, 2007 from the Caribbean Central American Action conference

It is anticipated that in a post-Castro Cuba the island’s economy will possibly evolve and eventually migrate into a free market economic model offering numerous investment opportunities to Cubans and foreign nationals alike.

As in other emerging markets these investment opportunities will be in infrastructure reconstruction, oil and natural gas, sugarcane ethanol, tourism, agriculture, consumer products and services, housing and real estate development, healthcare, and many other sectors and industries.

Given the complex relationship of an emerging market coupled with a centrally planned economy transition the roundtable will explore economic transition and market entry scenarios, capitalization of state enterprises, the role of the military in the economy, property claims and land tenancy legislation, as well as the future impact of Cuba on the region.

Victor Cuesta - National Society for Hispanic MBA’s
Pedro A. Freyre - Akerman Senterfitt
Jorge Piñon - University of Miami
Jaime Suchlicki - University of Miami

Mr. Suchlicki spoke first.

In summary, he said that Raul Castro is not a Gorbachev and there will be no dissolution of the Cuban system under Raul. He said that Cubans will wait for basic changes and Raul will deliver on his promises to open up the economy.

The Cuban military runs 60% of the Cuban economy and is well organized and disciplined. He does not see any threats to Raul and considers Cuba to be an advanced society in terms of it’s governmental structure. He says that the possibility exists that they may revive the position of Prime Minister and that Carlos Lage might get that job with Fidel Castro remaining President so there may be a division of leadership but the military will remain strong.

Apparently 5000 Cuban security personnel work for Hugo Chavez so Chavez likes his relationship with Cuba but Raul is making sure that Cuba has alternate sources of oil by way of Iran and says that Cuba will have it’s own oil in three to five years.

He says a new Cuban Ambassador to the US has been moved from Mexico to Washington and it is believed that this new Ambassador will push to ease Cuba sanctions but he does not expect any chance of negotiations between the US and Raul Castro. He expects Raul to maintain tight controls.

Mr. Jorge Piñon was next to speak.

He is former President of Amoco Latin America and is now a private consultant to oil companies and Cuba related subjects. He left Cuba in 1960 when he was 12 years old.

As Mr. Suchlicki spoke more about politics, Mr. Piñon is focused more on business and potential business opportunities in Cuba.

He tells his clients that they should have a business plan ready and ask themselves some questions like Is a future Cuba important to your business and What will the impact of a new Cuba be on your business?

The Rule of Cuba today is simply cash flow. There is very little asset base so he says most revenue generating operations in Cuba today are “storefront” operations and that there is not a lot of middle management.

Mr. Piñon made many good points about business in Cuba and then talked about how confiscated property claims are going to have to be handled in a new Cuba. He said there are three types of property claims that will have to be addressed, residential, agricultural and commercial. He believes the residential claims will settle for cents on the dollar because no one wants to kick Cuban people out of homes they have been living in for years.

He believes that agricultural and commercial claims will be settled fairly easily also for several reasons:

1. The Cuban government doesn’t have any money to settle claims so only cents on the dollar will be a possibility.
2. The assets were seized between 1959 and 1961 and former US businesses may not be interested to get the agricultural or commercial properties back because of disrepair or potential environmental pollution liabilities that they would have to deal with.
3. Opportunity costs of legal fees and time wasted fighting for a settlement so the long term benefits of settling quickly will outweigh the short term benefits of a settlement.

He said that the agricultural industry could use $2.2Billion dollars worth of foreign investment but that Cuba has the potential to generate $3Billion per year in revenue from agricultural development. Right now Nickel is a huge revenue generator for the island but sugar could surpass it. Last year Cuba actually had to import sugar which is not something the Cuban government wants to do.

Mr. Piñon talked about the Vietnamese model of land tenancy and how it might be applied to Cuba. He also said that no US company is going to come in and buy any Cuban government operation because of the poor organization and old equipment.

Mr. Piñon pointed out several industries requiring investment such as infrastructure, manufacturing and small enterprises. Dubai Ports World is looking to invest hundreds of millions of dollars in the port of Mariel but he does not believe they would invest that kind of money with owning or having long term rights to the land and more favorable foreign investment laws in general. A foreign operation is not going to invest that kind of money without some internationally recognized and standardized business practices.

With regards to manufacturing, he said about 2/3 of Cuba’s milk production spoils because it cannot get to market on time because of labor or mechanical problems. He said that some companies will decide to ship into Cuba rather than manufacture in Cuba. He talked about a home supply company that is prepared to simply ship dozens of containers into Cuba and let the products sit in warehouses rather than try to ramp up production on the island.

With regards to small enterprise, he expects the Cuban American community to be the leading source of small businesses in a post Embargo Cuba.

Next up was Victor Cuesta who talked about President Bush preparedness to aid Cuba with the Freedom for Cuba fund. Mr. Cuesta did not have much to say and honestly, if he thinks President Bush is prepared for a new Cuba, he is not very well versed on the subject.

After Mr. Cuesta, Pedro Freyre spoke very passionately about Cuba with many anti-Castro comments. He feels the Cuban American exiles will not get any fair settlements for their properties that were taken because most are not covered under US law and that the Cuban Americans are not liked by the Cuban government. So, he feels that the US businesses will be able to discuss settlements but that the Cuban American exiles will be excluded but he did say that things will get sorted out perhaps in a separate court system or by the way of compensation in tax credits for investing in Cuba.

He said that there are several property registries in Cuba that have detailed records of assets before the Revolution as well as one that covers present day assets.

He talked about how the art and cars that were seized are very valuable. In fact he mentioned that he believes that there are several Ferrari’s and Mercedes gold wings hidden away in Cuba.

Mr. Freyre believes that many Caribbean countries will be hurt by an opening of Cuba with regards to tourism and Mr. Suchlicki said that Florida banks and tourism will be negatively impacted by an new Cuba.

Mr. Piñon does not think that the US will have a disadvantage in a new Cuba because it is not there now. He said US companies will buy their way in when the time is right. He also went onto say that China is not in Cuba because of politics; China is in Cuba because of business. Mr. Suchlicki pointed out that China is operating a listening facility in Bejucal to monitor US intelligence.

Regarding a change in Cuba after Fidel’s death, Mr. Suchlicki and Mr. Freyre believe that Raul will be able to govern so long as he makes the small changes that he has promised to the economy so they don’t expect any big changes. Mr. Piñon said that US businesses should not predict but to simply “be ready” if and when a more open Cuba evolves.

  1. Follow up post #1 added on December 10, 2007 by publisher with 3905 total posts

    Here is some more information on the Dubai Ports World and Cuban government strategy for Mariel Cuba from Fairplay - International Shipping Weekly

    Cuban ports set for overhaul

    Fairplay has discovered that Cuban military officials intend to restructure the island’s ports, which includes moving all cargo operations from Havana. Cuba expert Jorge Piñon told Fairplay that the plan hinges on the participation of Dubai Ports World in a $200M redevelopment of Mariel.

    Piñon, a retired executive with Amoco and BP and now a professor at the University of Miami, made the disclosures following the Caribbean-Central America Action conference in Miami. He said the plan calls for moving all cargo operations from Havana, which will then be open exclusively to passenger vessels.

    The cargo terminals will be moved to Mariel and Matanzas, where massive work is needed to accommodate efficient operations. “Most of the Cuban infrastructure dates to the 1950s,” he remarked.

    Piñon also noted that the country’s sugar industry has declined to the point that the island, once one of the world’s key exporters, actually imported sugar over the past two years. He said some in Cuba hope to re-launch the sugar industry in hopes of becoming an ethanol player. He added, however, that ailing Cuban President Fidel Castro has a long-held disdain for both sugar and bio-fuels. “It could be because of Fidel’s relationship with [Venezuelan President] Chavez, who supplies Cuba with most of its oil on a ‘pay when you can’ basis,” said Piñon.

    Cuba consulting services

Would you like to add more information?

Only members can add more information. Please register or log in

  • Advertise at Havana Journal Inc
We recommend this AirBnB Food and Drink Experience... Cuban flavors: Food, Rum and Cigars
Images of Cuba
Teatro la Caridad
Follow Havana Journal
SUBSCRIBE to our Cuba Watch newsletter
LIKE us on Facebook

FOLLOW us on Twitter

CONNECT with us on Linked In

Section Archive
Havana Journal, Inc. BBB Business Review

Member of the Association for the Study of the Cuban Economy